Question

Nussbaum Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (9,000 units) $ 180,000 Variable expenses 117,000 Contribution margin 63,000 Fixed expenses 56,700 Net operating income $ 6,300 The break-even point in unit sales is closest to:

Answer 1

Answer:

8,100 units

Explanation:

The computation of the break-even point in unit sales is shown below:-

Break-even sales in units = Fixed cost ÷ Contribution margin per unit

where,

Contribution margin per unit = Selling price per unit - variable cost per unit

= ($180,000 ÷ 9,000) - ($117,000 ÷ 9000)

= $20 - $13

= $7

Now the break even unit sales is

= $56,700 ÷ $7

= 8,100 units